20 May 2022
Why businesses need to put ESG front and centre
The business world is evolving, recent events have shaped a new era and a shift from conversation to action when it comes to Environmental, Social and Governance.
Investors and customers alike are laying out what they want from businesses and if you’re not listening, you’re missing out. A 2019 survey by Reuters shows that 78% of corporate executives believe ESG has a noticeable impact on reputation. When you couple that with the fact that only 9% of executives are highly confident in their ESG capabilities, it’s easy to see why you should be putting ESG front and centre for your business.
ESG stands for Environmental, Social and Governance.
Now we’ve got the basics sorted, what’s the cause of the rapidly growing importance of ESG.
The global pandemic mixed with climate change and social issues have all contributed to a shift in the attitudes of customers. Consumers are keen to invest time and money into businesses that are looking to the future and who take responsibility for their impact on the environment and society.
ESG is no longer niche. We are seeing more and more importance placed on ESG and the capability of a business to deliver on it. When priorities change businesses that don’t change with them can get left behind.
Small businesses can benefit from flexibility when it comes to ESG. Actionable decisions can be made quickly to cater to ever-evolving consumer needs. By being on the ground and involved, leaders of small businesses can have their finger on the pulse of the community and can fulfil their commitment to ESG fast and effectively.
This doesn’t mean that larger organisations aren’t acting on the demand for better ways to do business. Investors seek business opportunities with clear ESG standards. Businesses of any size can benefit from raising standards, setting concise guidelines and being proactive when it comes to the economic and social impact of their work. Simply put, ESG should be on the agenda for all businesses.
The benefits of developing your ESG policy and standards are growing as the consumer base shifts even more towards them. ESG policies help set a business up to be more resilient now and for future scenarios. Some of the main benefits that the right ESG policy can provide for businesses are:
A benefit that any business will happily accept, reducing cost is one of the key benefits to ESG strategies. The global pandemic has caused a 74% increase in businesses undertaking cost cutting measures according to one study. A good ESG strategy can help businesses to make smarter cost cutting decisions and allows them to make decisions that don’t netgitivlty impact consumers or employees.
Every business regardless of size or performance is subject to regulations depending on their sector. Businesses that develop strong ESG measures, particularly when it comes to governance, can operate productively and efficiently with less interruption to their day to day activities.
Getting the right people in the right positions and keeping them there is vital to business success. A solid ESG strategy can help you retain the people you need in your business to achieve your goals and grow. As younger employees begin to enter the workforce, there’s a stronger emphasis on the importance of responsibility. In fact, 64% of millennials have said they consider a company's social and environmental commitments when looking for jobs.
A good ESG strategy allows businesses to expand into new markets and expand within their current market as well. Consumers are more likely to use a business that shows a commitment to the environment.
One report revealed that 81% of people want to buy from businesses that are sustainable. It’s clear that if you haven’t already adopted a sustainability policy then it should be top of your agenda. If you have a policy in place, you need to be talking about it.
If your business is considering changing its ESG policy, it’s important to think about where you sit currently. Is your business a blank slate or have you already taken steps to introduce strong ESG strategies? The businesses that make a success of ESG are the ones who roll it into the core of the business. The policies become a top priority and become part of the brand.
As the business world continues to evolve, businesses must focus on their ESG efforts. The work required is worth the reward. You’ll protect your business by making it future-proof and you’ll attract talented leaders who’ll drive the success of your organisation. An ESG strategy doesn’t just benefit your business, it benefits your people, consumers and wider society.
At Consulting Professionals, our mission is to create a sustainable and ethical business that works hard to create a fairer future for all. If you’d like to find out more about working with us, contact us today.